Reporting Segments

The Company's business is comprised of two reporting segments: Engine and Drivetrain. These segments are strategic business groups, which are managed separately as each represents a specific grouping of related automotive components and systems.

The Company allocates resources to each segment based upon the projected after-tax return on invested capital ("ROIC") of its business initiatives. ROIC is comprised of Adjusted EBIT after deducting notional taxes compared to the projected average capital investment required. Adjusted EBIT is comprised of earnings before interest, income taxes and noncontrolling interest (“EBIT") adjusted for restructuring, goodwill impairment charges, affiliates' earnings and other items not reflective of on-going operating income or loss.

Adjusted EBIT is the measure of segment income or loss used by the Company. The Company believes Adjusted EBIT is most reflective of the operational profitability or loss of our reporting segments. The following tables show segment information and Adjusted EBIT for the Company's reporting segments.

Net Sales by Reporting Segment



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Engine	$	1,506.4		$	1,359.3		$	4,483.6		$	4,202.7
Drivetrain	921.8			865.9			2,767.7			2,640.5
Inter-segment eliminations	(12.0		)	(11.0		)	(38.4		)	(31.2		)
Net sales	$	2,416.2		$	2,214.2		$	7,212.9		$	6,812.0

Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest (“Adjusted EBIT”)



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Engine	$	238.5		$	221.5		$	729.8		$	696.3
Drivetrain	111.5			89.4			325.9			271.0
Adjusted EBIT	350.0			310.9			1,055.7			967.3
Restructuring expense	13.3			1.3			13.3			26.9
Merger and acquisition expense	6.4			5.9			6.4			18.9
Lease termination settlement	—			—			5.3			—
Other expense, net	2.7			—			2.7			—
Asset impairment expense	—			106.5			—			106.5
Contract expiration loss (gain)	—			1.3			—			(6.2		)
Corporate, including equity in affiliates' earnings and stock-based compensation	37.3			33.2			121.4			105.7
Interest income	(1.3		)	(1.6		)	(4.2		)	(4.7		)
Interest expense and finance charges	17.6			22.4			53.6			65.1
Earnings before income taxes and noncontrolling interest	274.0			141.9			857.2			655.1
Provision for income taxes	79.4			48.8			241.9			213.4
Net earnings	194.6			93.1			615.3			441.7
Net earnings attributable to the noncontrolling interest, net of tax	9.7			9.8			29.2			29.9
Net earnings attributable to BorgWarner Inc.	$	184.9		$	83.3		$	586.1		$	411.8

Total Assets



	September 30,		December 31,
(in millions)	2017		2016
Engine	$	4,607.0	$	4,134.6
Drivetrain	3,748.8		3,212.4
Total	8,355.8		7,347.0
Corporate *	1,460.4		1,487.7
Total assets	$	9,816.2	$	8,834.7

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* Corporate assets include investments and other long-term receivables and certain deferred income taxes.